THE Asian Development Bank (ADB) and its development partners are providing a financial assistance package totalling US$108.25 million (K317.91 million) to expand Lae port, the largest and most important port in Papua New Guinea.
ADB was extending a US$100 million (K293 million) loan for the Lae port development project, which involves the construction of port facilities including a tidal basin, a multipurpose berth and terminal works including buildings, storage areas, roads, drainage, water, electricity and sewerage services.
The multilateral financing facility of the Organisation of Petroleum Exporting Countries (Opec) that channels aid to developing nations, was providing a US$6 million (K17 million) loan to fund the civil works for the port facilities.
A US$1.5 million (K4.35 million) grant from the Japan Fund for poverty reduction will finance the livelihood enhancement activities and social services involved in the resettlement of those who would be affected by the project.
There would also be a US$750,000 (K2.2 million) grant from ADB’s cooperation fund for fighting HIV/AIDS in Asia and the Pacific to minimise the potential risk of new HIV/AIDS infections.
The fund was set up in 2005 and focuses on operational support, to ensure that HIV/AIDS concerns are adequately addressed in ADB core business activities, and on increasing capacity at country and regional levels to address HIV/AIDS.
To complete the funding for the project, the Government is providing US$45.75 million (K134.36 million).
As Papua New Guinea’s economy relies heavily on trade, the port sector plays a vital role.
Fifteen out of the 20 provinces are on the coast and more than 60% of the nation’s six million people are widely dispersed.
The infrastructure specialist of ADB’s Pacific Department Li Cai said: “The port sector is important not only for adequate and efficient handling of exports and imports, but also for the efficient movement of goods.”
He said Lae port served as a gateway linking the world market with a large hinterland, which comprised half of PNG and where half the population lives.
“Since 1995, the port has experienced an average annual increase in cargo of 131,000 tonnes, with containerised cargo growing more than 5% and general cargo by 2.5% annually,” Mr Li said.
He said in 2005, the volume of cargo through Lae port reached 2.4 million tonnes.
“Frequent congestion at the port resulted in high costs for users and hampers international and domestic trade.
“Some shipping companies have expanded their fleet and are demanding efficient and modern port infrastructure and management,” Mr Li said.
The ADB director-general of Pacific department Philip Erquiaga said the PNG macroeconomic outlook had improved considerably as a result of strong commodity prices, with Lae Port forming the backbone of the economy and is experiencing a boom in development activities.
“Unless Lae port is expanded and its capacity increased, it will become a constraint to the continued economic prosperity of PNG,” he said.